South Africa’s Competition Commission has moved toward a franchise market inquiry into the country’s near R1 trillion franchise sector, publishing draft terms of reference on Friday, 26 June 2026 that could reshape how franchises operate.
The commission published the draft terms of reference on Friday, 26 June 2026, signalling its intention to examine whether the structure of the sector distorts competition and shuts out small operators, as reported by Business Day.
The franchise sector generated close to R1 trillion in turnover in 2023.
What the franchise market inquiry will examine
The inquiry will focus on three principal themes. It will look at funding and finance requirements for would-be franchisees, at the terms written into franchise agreements and commercial practices, and at the information gap between franchisors and the people who buy into their brands.
At stake is one of the country’s largest commercial ecosystems. The sector spans more than 800 franchisor brands, about 3,500 franchisees and over 30,000 outlets, reaching into fast food, retail, automotive services, construction and health and beauty.
It supports roughly 500,000 jobs and about 15% of GDP.
For consumers, franchises are everywhere in daily life, from the fast-food outlet on the corner to the fuel station, the grocery spaza-style convenience store and the hair salon.
A shake-up in how these businesses are owned and run could filter through to prices, service and who gets to open a store in the first place.
Why the franchise market inquiry targets transformation
The commission believes the sector has fallen short on transformation. Industry figures it cites show white entrepreneurs own 57% of franchise outlets, compared with 18% for African owners, 17% for Indian owners and 8% for coloured owners, a spread it reads as evidence of deep imbalances in ownership.
The move fits a wider push to open the economy to smaller players. The commission frames the inquiry around public interest goals in the Competition Act, including giving small and medium enterprises a fairer chance to take part and widening ownership among historically disadvantaged entrepreneurs shut out of the sector.
For franchisees, the concern is bargaining power. The regulator argues that despite the sector’s reputation as a low-risk route into business, franchisees can be left vulnerable to abuse where power imbalances run deep, with agreements and finance terms often set on the franchisor’s side of the table.
What happens next in the franchise market inquiry
The draft terms of reference open a window for public comment before the inquiry formally begins its work.
Franchisors, franchisees and industry bodies will be watching how the final scope lands, since the outcome could bring new rules to a sector that touches everyday spending across South Africa.
